Wednesday, September 27, 2017

How I Came To No Longer Be A Kaldorian Economist

Yes, for a period of time, according to some sources, I was a member of the "Kaldorian" school of Post Keynesian economic thought, although I had not previously thought of myself as such, indeed, had been unaware that there even was such a school of economic thought. But now, according to such sources, I am no longer a member of such a school. Indeed, it is not clear that there even is such a school, if there ever was. This is a tale of the ongoing tangle of schools of Post Keynesian economics, as well as how Wikipedia operates, and more broadly the history of economic thought.

I note that while it lasted, this matter was taken at least somewhat seriously. So, a few years ago I was at a conference and walked into a plenary address that was being given by Tyler Cowen of George Mason. There was a pretty large crowd, but Tyler interrupted his talk when I came in to note, "I see that Barkley Rosser has entered the room, so I had better be careful what I say about Nicholas Kaldor." Indeed, ironically, he was just about to say something about Kaldor, and I must say that I had no serious disagreement with his remarks, although maybe he cleaned up his act, given my presence as the representative of "the Kaldorian School," if not the late Lord Kaldor's personal representative. That was then, but this is now, and I am nothing, nothing, I tell you!

Anyway, as I said, I had not been aware of such a school, much less that I was supposedly a part of it, but then in 2014, my friend Marc Lavoie published his excellent Post-Keynesian Economics: New Foundations. In it he provided set of supposed schools of Post Keynesian economic thought. I note that there has long been a history of arguing and battling and generally warring among various strands of Post Keynesian thought, with some expelling others, although not necessarily totally. Joan Robinson coined the term back in the 1950s, and for a while Paul Samuelson was using the term for an eclectic bunch of Keynesian economists of the early 1960s. But the term became narrower as the 1960s moved on and journals were started, and battle lines were drawn. Going into the 1980s, and focused on Post-Keynesian summer schools being held in Trieste, Italy, there was a sharp split between Sraffian neo-Ricardians based in Italy, led by the late Pierangelo Garegnani, and American Post Keynesians who focused on uncertainty and the role of money led by Paul Davidson. In between them was a more British and Australian based group, some of whom were thought to be followers of Michal Kalecki, and probably Joan Robinson, some of whom made efforts to overcome the sharp split between these other two. The most important leader of that group was probably Geoff Harcourt, he of the "different horses for different courses," how open-minded of him. Anyway, those summer schools fell apart, with each of the more sharply opposed groups not attending the seminars of the other, and after this the Americans all but expelling the Italian Sraffian-neo-Ricardians from Post Keynesianism, even if they were still counted by others.

Well, Marc moved beyond this to list five different schools of Post Keynesian thought, providing a small group of people supposedly in each of these groups. They were fundamentalists, which included Davidson (who has long emphasized going back to Keynes to see what he wrote), Kaleckians, and Sraffians, which pretty much gave us what appeared to have come out of the 1980s arguments. But then he added two more, Institutionalists and (ah ha!) Kaldorians. This last group had in it, of course, Kaldor himself, as well as three other dead men: Wynne Godley, Richard Goodwin, and Roy Harrod. A leading Institutionalist was John Kenneth Galbraith on his list. As it is, I suspect that Marc coined this supposed school of "Kaldorians" because he himself identified with it. He was disgusted, as have been many of us, with the wrangling warfare between the fundamentalists, Sraffians, and Kaleckians. So, cook up another school. My bet that he views himself as part of the Kaldorians is that he coauthored a lot with Wynne Godley, and he identified an interest in nonlinear dynamics as part of Kaldorianism, which indeed was an interest of Kaldor who emphasized economies of scale as breaking down neoclassical equilibrias.

Needless to say, I have long been interested in nonlinear dynamics, so that set up the next development. That was that on the Wikipedia entry for "Post-Keynesian economics," somebody imported Marc's lists and then added to them massively, but then replaced the Institutionalists with the Modern Monetary School (MMT), led by people like Randy Wray and Warren Mosler and Stephanie Kelton. On these longer lists, there I was in with people like Godley and Goodwin (whom I especially admire) on the list of the supposed Kaldorian strand of Post Keynesian economics. Hot stuff, whoop de doo. Not long after that, there I was with Tyler Cowen publicly identifiying me as one, although when I discussed the matter with Marc Lavoie himself, I think he was sort of annoyed that somehow I had gotten added to this list. As it is, I do not know who put that stuff in the Wikipedia entry, although I saw such a list put up on the internet by a blogger calling him(her?)self "Lord Keynes." Yeah, some people are a bit full of themselves.

I had not checked on any of this for some time but was revising a paper for a journal in which I and coauthors quoted Kaldor on equilibrium, ("Consistency and Completeness in General Equilibrium" with Simone Landini and Mauro Gallegati). Looking at the quote I thought I would check on this on Wikipedia, only to find that those lists of schools are gone. The verbiage starts out mentioning Kalecki, Joan Robinson, Kaldor, Davidson, Sraffa, and Jan Kregel, also noting Robert Skidelsky's role in defining Keynesianism. It then later mentions the Cambridge capital controversy, Sraffa and the neo-Ricardians are mentioned. Kaldor is mentioned as is Paul Davison. Then money circuit theory is mentioned as is modern monetary theory (MMT). Wynne Godley and Hyman Minsky (who always rejected the "Post Keynesian" label for himself) get mentioned, with final shoutouts to chartalism and functional finance, both well regarded by the MMT school (there is also a tour of nations and journals and groups). This is followed by a list of 26 supposed "leading first and second generation" Post-Keynesian economists, of whom I note that 14 are dead. I list them here for the record:

Just to further stir the pot, there is now a new post about "Post-Keynesian economics" up on Rational Wiki, whatever it is. It has clearly been put up by strong advocates of the MMT school, whom many think view themselves as the true heirs and new leaders of Post Keynesian economics. If that is the case, this Rational Wiki post would appear to be part of that effort. After a very brief boilerplate opening, modern monetary theory is presented as the main idea in Post Keynesian economics. That is it. The rest can go shove it. The list of external links go to sites run by Warren Mosler, Stephanie Kelton, Steve Keen (more a Minsky-money circuit guy than a hard core MMT person), and two to Bill Mitchell, up there with Mosler and Kelton as an MMT leading figure. There is a further external links list that go to John Maynard Keynes, Dean Baker, and "Market monetarism." I think Dean Baker mostly thinks of himself as a Post Keynesian economist, but has mostly stayed out of all these controversies.

Anyway, probably this is all just picking at minor niggling and unmportant divisions and wrangles, but standing back from it I find it curious, both in terms of the development of these labels and controversies, as well as what the heck is going on with the Wikipedia accounts of all this. On the latter, this makes me more skeptical of Wikipedia, having also recently run into some outright errors on that source I shall not get into, but just encourages me in continuing to refuse to accept Wikipedia as a source on papers by either students or actual professional economists.

12 comments:

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Setting the history of economic non-thought rightComment on Barkley Rosser on ‘How I Came To No Longer Be A Kaldorian Economist’

Keynes has to be credited for realizing that the economics of Jevons/Walras/Menger/ Marshall was false at its core and that nothing less than a paradigm shift was needed: “The [neo-]classical theorists resemble Euclidean geometers in a non-Euclidean world who, discovering that in experience straight lines apparently parallel often meet, rebuke the lines for not keeping straight ― as the only remedy for the unfortunate collisions which are occurring. Yet, in truth, there is no remedy except to throw over the axiom of parallels and to work out a non-Euclidean geometry. Something similar is required to-day in economics.”

After Keynes, every economist who still does not see the necessity of a paradigm shift is a moron. One loudspeaker of this prevailing majority is Krugman who debunks himself with: “most of what I and many others do is sorta-kinda neoclassical because it takes the maximization-and-equilibrium world as a starting point”.

Fact is that maximization-and-equilibrium economics has already been dead in the cradle 140+ years ago.

Keynes, though, messed up the shift from microfoundations to macrofoundations. His lethal blunder can be exactly located in the GT: “Income = value of output = consumption + investment. Saving = income - consumption. Therefore saving = investment.” (p. 63) This two-liner is conceptually and logically defective because Keynes never came to grips with profit. (Tómasson et al.)

Because profit is ill-defined, the whole analytical superstructure of Keynesianism is false.#1 Yet one of the outstanding characteristics of the cargo cult science economics is that refutation is simply ignored: “In economics we should strive to proceed, wherever we can, exactly according to the standards of the other, more advanced, sciences, where it is not possible, once an issue has been decided, to continue to write about it as if nothing had happened.” (Morgenstern)

As a result of the continuous violation of scientific standards, the history of economic thought boils down to a history of incompetence or/and corruption. What we have today is the indefensible pluralism of provably false theories.

After-Keynesians never realized Keynes’ foundational blunder and thereby became part of the abysmal failure of what was meant as paradigm shift. Barkley Rosser, of course, had his finger in every After-Keynesian pie but, like the rest, cannot not define macroeconomic profit until this very day.#3 He concludes his synopsis of After-Keynesianism: “Anyway, probably this is all just picking at minor niggling and unimportant divisions and wrangles, but standing back from it I find it curious, both in terms of the development of these labels and controversies, as well as what the heck is going on with the Wikipedia accounts of all this.”

Every account that characterizes the history of economic non-thought as anything other than as history of incompetence or/and fraud misleads the general public just as the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel” misleads the general public year after year.

Only one response to you on this thread, Egmont, since this post brought you out from under your rock: for anybody who has not read Egmont previously, his theory of profit that he touts and his entire reason for why nearly all other economists are unscientific frauds, is utterly vacuous, worthless, and useless. He has been pushing everywhere he can post for years now, and nobody is taking him up on it or using it. The worthless vacuity of his theory has been pointed out at length previously by me and others, and if you have not read this stuff, I suggest you go look at past Econospeak posts, especially the long debate following my post on profit and capital, easily found by googling "Econospeak Rosser profit and capital." There you will get more of your fill of Egmont's arguments and why they are such a total crock.

He is an obsessed crank. Please get back on your meds, Egmont, and goodbye from me for this thread.

I don't think Dean Baker would agree that he is mostly a post-Keynesian. He believes that conventional (really neoclassical-synthesis) economic theory has progressive implications that are typically ignored by neoclassical economists as "inconvenient truths." I asked him about this explicitly a couple years ago, and that was his answer.

My reaction to Marc's book was that its a terrific resource but reads like an extended (slightly peevish) referee report on every paper published by heterodox economists. I like the way Marc writes but enough with the polemics already.

But he is at least sympathetic with Post Keynesian economics, even if he is not "mostly" one? I may have misrepresented his views, and I stand corrected. I have actually discussed these matters with him to some extent, and while he is sympathetic, he has never hung around with the any of the PK crowd especially or attended any of their conferences or schools to the best of my knowledge. He might be best labeled a fellow traveler, certainly a fan of Minsky, but then, Minsky himself always rejected the label, even as the PKs all claim him to the max.

Both were influenced by the emerging Keynesian paradigm of the 40's Lerner indeed focused its policy mil cations more sharply then most fare doVickrey in us second career as a macro policy radical Fearlessly carried thru on the ever more cautious inflation obsessed Lerner 's early insights In macro management And his late MAP Wild bill before he died was heavily pushing for simple fiscal means to employment Max He wanted to test limits In a way Lerner never did

American Post Keynesianism worthy of the name Like Nell and DavidsonAlways struck me as more interest in theory was then policy Rx And thus Purely Sundat reading

(ii) The first proposition is provably false. By consequence, all I=S/IS-LM models are false. Worse, the whole theoretical superstructure of Keynesianism is false. Worst, the whole of After-Keynesianism is false.

(iii) The valid formal refutation of Keynes’ false premises has been given by Allais (Nobel Memorial Prize in Economics 1988)

(v) During his whole professional life as a cargo cult economist, Barkley Rosser never realized that there is something fundamentally wrong with both Walrasianism and Keynesianism. Neither did he resolve any contradictions nor rectify anything, except perhaps the family tree of the House of Sa’ud.

(vi) The significance of Barkley Rosser consists in being a living example for the scientifically degenerate state of economics.

Thankfully, physicists and chemists don't have hilarious parsings of 'schools ofthought: "Are you a Whiteheadian or an Einsteinian on relativistic mechanics?" Happy hour banter, nothing more. Whereas the economists seem to have a bit of the narcissism of minor differences problem in spades...

These economic "schools of thought" and groupings are in fact identical to the proliferation of Christian and Muslim "religious sects".. both of which are founded on "beliefs" based on selective empirics and "follow the leader" mentality. Every sect is created by some slight or major disagreement with the leaders of the sect they came from, spawning new leaders, new sects, of which some catch and others die or are absorbed to maintain some degree of relevance or influence.

All these several and morphing schools of thought tell us though, is that economists don't know how economies actually work at all. If they did there would be only one school.... or that economies are constantly in a state of cause/effect change so that any prior theory or supposition or belief can't be substantiated in the present... therefore inapplicable other than as another "miss".